HIGH PERFORMANCE WORK PRACTICES

SUBMITTED TO:
DR. ZAHRA PAUL
SUBMITTED BY:
Iqra Batool (04)
Ayesha Shafiq (11)
Muntaha Imran (10)
Kashaf Amjad (20)
Yusra Rahim (33)
Fajar Akhtar (57)
SUBJECT
Organizational Design and Behavior
SECTION
A

UNIVERSITY OF THE PUNJAB, LAHORE

High Performance Work Practice 2

Contents
Definition ................................................................................................................................... 2

Elements of a HPWP ................................................................................................................. 3

Characteristics of an HPWS....................................................................................................... 4

Effect of HPWP on organizational performance? ..................................................................... 5

Seven Practices of High-Performance Work Systems (HPWS) ................................................ 5

Theories on High Performance Work Practice: ......................................................................... 7

Broad areas of HPWPs............................................................................................................. 10

HPWPs in Developing Countries: ........................................................................................... 11

HPWPs in Developed Countries .............................................................................................. 12

High Performance Work System – Benefits to Employees and Organization ........................ 15

Shortcomings of HPWS: .......................................................................................................... 16

Effective Implementation of HPWP: ....................................................................................... 16

Conclusion: .............................................................................................................................. 16

References: ............................................................................................................................... 17
High Performance Work Practice 3

Definition
“High-performance work practices (HPWPs) can be defined as practices that have been
shown to improve an organization's capacity to effectively attract, select, hire, develop, and
retain high-performing personnel”.
Garman and colleagues (2011) identified the following HPWPs, organized into subsystems, as
particularly relevant to health care providers.
Subsystem #1: Engaging Staff. The four practices in this organizational engagement
subsystem share a common theme of ensuring employees' awareness of and personal stake in
the organization's vision and its current level of success in pursuing that vision.
Subsystem #2: Acquiring and Developing Talent. The four practices in this subsystem focus
on building the quality of the organization's workforce through attention to attracting, selecting,
and developing staff.
Subsystem #3: Empowering the Frontline. These practices most directly affect the ability
and motivation of frontline staff, clinicians in particular, to influence the quality and safety
their care team provides.
Subsystem #4: Aligning Leaders. These practices influence the capabilities of the
organization's leadership in running and evolving the organization as a whole.

Why do high-performance work practices matter?

Huselid (1995) reports that companies using HPWPs benefit from reduced employee
turnover while increasing their productivity and financial performance. Becker and Gerhart
(1996) also indicate that HPWPs can act as a source of competitive advantage as long as the
managerial practices are aligned with existing organizational features (internal fit) and with
strategic and operating objectives (external fit).

Elements of a HPWP
The elements of HPWP are as follow
➢ Information sharing
➢ Participative decision making
➢ Increasing knowledge
➢ Redistributing power
➢ Information Sharing
• Provide employees with information about the business
▪ Enables the employees to make suggestions for improving product & processes
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➢ Increasing knowledge
• Training
▪ Business knowledge
▪ It enables the employees to understand long-term goals.
▪ Interpersonal and group skills
• It gives employees the skills to work together and engage in problem
solving.
▪ Basic job skills
It gives them the foundation for understanding their role in the organization
and how it fits in to the total organizational goals.
➢ Rewarding performance
• Incentives to reinforce commitment
▪ Profit sharing, share in cost reduction
• Skill base pay or other systems to reinforce learning
▪ Provide incentives to engage in learning & participate
• Crucial to include job security
➢ Redistributing power
• Shifting decision-making downward
• Must empower workers to make decisions
▪ JetBlue does it by five core values which are safety, caring, integrity, fun, and
passion.
• Restructures organization to team level decisions
▪ such as quality circles, team meetings to systematically shift power downward.

Characteristics of an HPWS
Nadler and Gerstein (1992) have characterized an HPWS as a way of thinking about
organizations. It can play an important role to achieve a ‘fi t’ between information, technology,
people and work.
➢ It links the fi rm’s selection and promotion decisions to validated competency models.
➢ It is the basis for developing strategies that provide timely and effective support for the
skills demanded to implant the fi rm’s strategies.
➢ It enacts compensation and performance management policies that attract, retain and
motivate high-performance employees.
High Performance Work Practice 5

➢ High-performance work systems provide the means for creating a performance culture.
They embody ways of thinking about performance in organizations and how it can be
improved.

How High-Performance Work Practices affect organizational performance?

HPW practices affect organizational outcomes by shaping employee behaviors and
attitudes. More specifically, high performance work practices (HPWP) increase organizational
effectiveness by creating conditions where employees become highly involved in the
organization and work hard to accomplish its goals, in other words, by increasing their
employees’ commitment to the organization and job satisfaction.

Seven Practices of High-Performance Work Systems (HPWS)

HPWS systems emphasize employee involvement and reflect a commitment to create
an organizational culture based upon commitment rather than control. At the same time, the
cultures of high-performance organizations emphasize the pursuit of excellence and expect
employees to be well-qualified, highly competent, and constantly engaged in improving the
organization. Management experts have identified common high-performance practices that
create competitive advantage and enhance organizational performance. The following is a
summary of seven human resource practices for producing higher profits through engaging
employees as full owners and partners in an organization’s success.
1. Ensuring Employee Security
Despite the trend of many businesses to engage in downsizing and hiring part-time and
contract employees to avoid creating obligations to employees, the evidence has shown that
organizations who engage in these practices have rarely created new wealth or improved the
long-term bottom line of their organizations. HPWS systems advocate creating high-trust
partnerships with employees that build commitment and promote extra-mile and extra-role
behaviour that are critical for success in the modern organization. A number of scholars have
reported evidence that organizations that implement policies that ensure employee security
build trust with the people who are hired and find that their employees perform better and are
more committed to their organization’s success.
2. Selective Hiring
Carefully evaluating new hires requires that organizations are precise in identifying the
critical skills and attributes of their employees in the first place. Hiring to fit requirements of
the job makes more sense than simply hiring candidates with the best academic pedigrees or
High Performance Work Practice 6

who look the best on paper. Identifying attributes like character, respect for others, and a service
orientation that do not change through training actually improve employee retention and long-
term fit. So, focusing on hiring the right people has been cited as a key difference in those
companies that are “great” rather than simply “good.”
3. Decentralized Decision-Making
Organizations that establish HPWS cultures recognize the importance of clearly
identifying goals and objectives. In implementing those goals, HPWS companies delegate
decision-making throughout the organization and empower their employees to deliver
outstanding service to customers and achieve optimal organization results. Incorporating well-
trained and supported self-managed teams that enjoy autonomy and broad discretion in making
decisions demonstrates the high trust in employees that characterizes HPWS.
4. High Results-Based Compensation
Developing a compensation system that rewards employees at all levels when the
organization succeeds promotes commitment to shared goals and increases employee
awareness of their roles in contributing to profitability. Compensating employee’s contingent
upon organization performance is most effectively adopted as part of a high-performance
culture that incorporates profit sharing throughout an organization. The logic of contingent
compensation is implicitly equitable and fair and confirms to employees that they will share in
the fruits of their work. Group-based profit sharing or gainsharing also creates a social system
of accountability to the organization and to other team members.
5. Training by Commitment
Virtually every HPWS organization emphasizes training by commitment as contrasted
with training focused on control-oriented management systems. Training employees in how to
resolve problems, to take responsibility for quality, and to take the initiative in suggesting
changes in organization work methods demonstrates trust in the quality of employees hired. In
contrast with many organizations that consider training to be a frill that can be eliminated,
HPWS systems carefully determine the type of training that is most needed to achieve
organizational goals and then invest heavily on helping employees to optimize their ability to
succeed. Research evidence suggests that engaging employees in work-related team training
increases their ownership and commitment and their ability to contribute to the achievement of
critical organizational goals.
6. Reduced Status Barriers
A basic assumption of an HPWS is that good ideas and organizational improvements
can come from employees at all levels of the organization. Wage inequality and the use of
High Performance Work Practice 7

symbols like language, dress, physical space, and benefits can send a message to employees
that an organization views status hierarchically, rather than treating every employee as if he or
she is both valued and valuable. Stephen R. Covey repeatedly noted that great organizations
seek to build high trust cultures by nurturing and developing people, rather than by controlling
them. Treating employees like valued partners by reducing status barriers, by empowering
employees, and by treating employees with dignity and respect builds trust and commitment.
7. Sharing Key Information
The sharing of financial, strategic, and performance information conveys to employees
that they are trusted partners who can utilize this important information to assist their
organization to achieve its goals. Highly motivated and well-trained employees need
information to be able to contribute to their organization’s success. Sharing information and
providing the training in how to use it to achieve goals makes implicit sense, yet many
traditional organizations refuse to do either and pay the price in lost opportunities and reduced
trust.

Theories on High Performance Work Practice:

According to literature pertaining to High performance work practice, there are four
different theoretical approaches to explain how organization behavior practices related to
organizational performance. It is claimed that increased implementation of High-performance
work practices results in better performing organizations in terms of financial and employee
outcomes.
The Resource-Based View (RBV) Approach:
The Resource-Based View (RBV) focuses on internal environment. The Resource-
Based View (RBV) argued that organizations can gain competitive advantage by using high
performance work practices over the other competitors in the market or industry. (Barney,
2001). The terms such as knowledge workers, intellectual capital, and high-performance work
systems reflect a new interest in people as a source of competitive advantage rather than as a
cost that needs to be minimized. Consequently, people as intellectual assets and the systems
within an organization designed to attract, develop, and retain them are emerging as significant
elements of the strategic decision-making process (Becker & Huselid, 1998). High-
performance work practices are a set of coherent and consistent practices that see people as a
source of competitive advantage. Although HPWPs have neither been consistently defined nor
uniformly named, Datta et al. (2005) point out that HPWPs are most commonly viewed as a
set of internally coherent and consistent human resources practices designed to
High Performance Work Practice 8

• promote employee knowledge

• motivation
• commitment
Also called “high-performance work systems or alternate/flexible work practices”
(Delaney & Godard, 2001), these programs share some common elements including rigorous
recruitment and selection processes, performance-based incentives, and comprehensive
training programs centered around the needs of the business (Becker, Huselid, Pickhus, &
Spratt, 1997)
There is enough empirical research have been conducted to establish the relationship
between high performance practices and organizational performance. McDuffie (1995) also
explained that the organizations get higher performance when organization behavior practices
are utilized not as individual isolated practices abut as bundle of practices. Barney (1991)
suggests basic requirements through which high performance activities can provide a source of
sustained competitive advantage to organizations are Trust and Mutual Respect, Shared
Leadership, Effective Working Procedures, Building on Differences, Flexibility and
Adaptability and Continuous Learning.
The Institutional Approach:
This approach emphasis that organization must always pay attention to the legal and
institutional conditions which exist in the external environment of an organization but
dramatically affect its performance and ability to achieve legitimacy which is necessary for its
survival (DiMaggio & Paauwe & Boselie 2005). This approach emphasizes that an
organization carries out its activities within a social framework consists of norms, values
and different assumptions. These norms and values encourage employees to have appropriate
or acceptable organization behavior. Hence success of the organization depends on factors such
as efficient coordination and control of productive activities by performing high work
practices.’ (Meyer and Rowan 1977). Elements to creating a high-performance company
culture are clarify and communicate values, leaders committed to developing the desired
company culture will work to establish the values that anchor it, reinforce positive behavior,
encourage open communication, empower employees and collect feedback.
The Contingency Theory Approach:
This theory tries to link different dimensions of the external environment to the
company or organizational attributes. It implies that if the organization wants to get maximum
benefits from the high-performance work practices, those must be consistent with the other
aspects of the organization. (Delery and Doty 1996). This theory proposes that company’s
High Performance Work Practice 9

strategy and strategic objectives moderates the relationship on high performance work practices
and organizational performance (Youndt, Snell, Dean & Lepak 1996). This theory says to
increase the efficiency and effectiveness of the organization it needs high performance work
practices. HPWPs involve substantial investment in human capital to empower employees by
developing their knowledge, skills, flexibility, and motivation, with the expectation that the employer
will provide them with the ability and the opportunity to deliver input into workplace decisions (Van
Buren & Werner, 1996).
Pfeffer (1998) outlines the main components of HPWPs in organizations:
• Highly selective hiring and sophisticated selection process
• Employment security and internal labor markets
• Comprehensive training, learning, and development
• Employee involvement, sharing of information, and workers’ voice
• Team working/Self-managed teams
• High compensation based on performance
• Reduction of status differentials
The Universalistic Approach:
The universalistic approach proposes to gain competitive advantage over the other
rivals in the market organization must utilize best imply High performance work practices as a
bundle of practices but not as isolated practices. (Delery & Doty 1996). However, application
of these practices is universalistic. The universalistic perspective means that all these high-
performance practices are universal across organizations. (Delery &Doty, 1996). In other
words, if these practices are successful in one organization, then it is assumed to work in
another organization.
The universalistic perspective suggests that all High-performance work practices are
similar across various industries and organizations. This is very simple theory in organization
behavior. These High-performance work practices are most effective practices adopted by the
organizations to gain competitive advantage.
Guest et al (2004) stated that some of the combination of practices gives more
advantage than utilization of single high-performance practices alone. But still there is
hesitation about which practices should be linked to form high performance work practices.
The ability for researchers to find the most effective combination represents both theoretical
and statistical challenges. The U.S Department of Labor has identified the following practices
as high-performance work practices i.e., extensive recruitment and selection process, training
procedure, formal information sharing, attitude assessment, job design, grievance procedures,
High Performance Work Practice 10

labor management participation program, performance appraisal, promotion, incentive

compensation system based on merit. Huselid (1995) tested the link between the practices
suggested by US Department of labor and found that these practices are associated with higher
productivity, monetary performance and lower labor turnover.
Sung and Ashton (2004) empirically tested 35 high performance work practices by taking as
the sample of 100 best companies named by the Sunday Times newspaper in UK. Those are
Annual appraisal, Formal feedback on job performance from superiors/employers, Formal
feedback on job performance from customers/clients, Reviewing vacancies in relation to
business strategy, Formal assessment tools for recruitment (e.g. competencies etc.), Annual
review of employees’ training needs, Continuous skills development programs, Training to
perform multiple jobs, induction training, Work-(re)design for improved performance,
Workforce diversity for competitive edge, Mentoring, Quality Assurance, The Business
Excellence Model or equivalent, Performance pay for some employees, Performance pay for
all employees, Profit-sharing for some employees, Profit-sharing for all employees, Share
options for some employees, Share options for all employees, Flexible job descriptions,
Flexible working (e.g. hours, locations, job-share etc.), Job rotation, Family-friendly policies,
Non-pay benefits (e.g. free meals, gifts or health packages), Performance pay for some
employees, Performance pay for all employees, Profit-sharing for some employees, Profit-
sharing for all employees, Share options for some employees, Share options for all employees,
Flexible job descriptions, Flexible working (e.g. hours, locations, job-share etc.), Job rotation,
Family-friendly policies.

Broad areas of HPWPs

1. The first area involves high employee involvement practices, which encourage trust and
communication between employer and employees. These practices empower employees
to take more control over their work and daily operational decision-making. In turn, this
leads to higher levels of motivation, leadership, communication and teamwork. For
example, a study analyzing 132 U.S. manufacturing firms found that companies with high
involvement work practices had significantly higher labor productivity than their
competitors. Typical practices would include self-directed teams, quality circles and
sharing/access to company information.
2. The second area of HPWPs concerns HR practices that focus on human capital
investment and skills development within the organization. This will require companies
to take a long-term strategic view of HR resources rather than a short-term operational
High Performance Work Practice 11

cost-cutting approach. To compete successfully in today’s difficult economic times, many

business leaders have opted to cut labor costs, hire part-time employees to avoid costly
fringe benefits, and adopt a “lean and mean” management approach to running their
organizations. While it is foolish for companies to spend money unwisely in managing
human capital, a growing body of research evidence also confirms that “high performance
work systems” (HPWS) are worth the investment of time and effort. Typical HR practices
include specific recruitment processes, performance appraisals, work redesign, training
and development, strategic work force planning and organizational continuous
improvement programs. Currently, about 20% of firms link employee compensation to
the firm’s earnings.
3. The third area of HPWPs considers the issue of reward and commitment, which are
intended to create a sense of commitment to the organization. Financial rewards, such as
profit -sharing and share options, offer a sense of belonging to the company, as employees
become shareholders within the organization. Performance-related pay is an important
tool in enhancing commitment and a higher performance output. Financial rewards are
not the only tools for higher organizational commitment. Family-friendly policies,
flexible work, equal terms and conditions, career progression plans and subsidized
training opportunities all have a significant, if not higher, effect of creating a sense of
commitment. Establishing commitment to HPWS is an on-going activity which has no
end. There must be both top-down and bottom-up approaches. While top-down approach
communicates manager support and clarity, bottom-up approach ensures employee
acceptance and commitment.
HPWPs in Developing Countries:
Almost 17 manufacturing and service organizations working in Developing countries
confirmed the significance of association of implemented and perceived HPWS with
managerial and employee rated organizational performance.
Examples:
1. Sapphire:
Sapphire makes an effective communication with their employees to make a best relationship
and always give superior rewards to its employees. Internally labor management rules are
observed and followed according to situation. An inclusive and people-centered, open and
creative culture, where decision-making is clearly communicated and shared throughout the
organization.
High Performance Work Practice 12

2. Nestle
We are a people-inspired company. People are at the heart of everything we do. We look to
promote a healthy lifestyle inside and outside work.
Our culture is based on our values rooted in respect: for ourselves, for others, for diversity and
for the future. Our ways of working and flexible environment allow us to adapt to the ever-
changing world. Promoting an inclusive environment helps us bring our purpose and values to
life every day. Besides these financial rewards, we offer many opportunities for personal
growth and development to help you reach your full potential, such as an internationally mobile
career that truly broadens your experience and knowledge.
3. Nishat Linin:
Nishat group of companies always focuses on its product and its customer. For that they always
ensure a best quality by managing their performances and working of their employees. They
always look after the assigned responsibilities and make an effective communication with their
employees to make a best relationship.

High performance work practices in Developed Countries: (USA, China,

Japan, Korea)
High performance work systems (HPWS) are seen as important in helping strengthen
competitive strategies of organizations in developed countries. Research in developed countries
has shown that there are positive relationships between HPWP and organizational performance.
Out of developed countries, I chose USA, China, Japan and Korea to identify how HPWP are
implemented in these countries.
1. Japan:
High Performance Work practices and Organization Performance in Japan:
According to Huselid journal of HPWP in Organization, Japan.
HPWP increasingly affect firm turnover positively and significantly (Huselid, 2019; Guthrie,
2019).
High performance work practices are linked to effective human capital and extensive sharing
of financial and performance information.
Human capital is important for employees because some level of human knowledge and
skills is necessary for an organization to improve organization performance.
When important information is shared with employees by organization, they feel themselves
important and become motivated to perform well in the organization.
High Performance Work Practice 13

2. USA

How High-Performance Work Practices Work in USA

According to research article of Taylor and Francis “HPWP and employ engagement”,
USA.

High-performance work practices have been shown to work in three different ways in
organizations of USA:

(1) Fostering development of human capital, creating a performance advantage for

organizations through processes such as increased employee skill development and improved
customization by employees in service industries.

(2) Enhancing the motivation and commitment of employees, creating an organizational and
labor-management climate that motivates and supports employee engagement in problem
solving and performance improvement

(3) Building organizational social capital, which facilitates knowledge sharing and the
coordination of work, and thus improves performance.

Workforce Benefits in Organization:

Workers benefit from adoption of high-performance work systems in well-documented ways:

(1) Their human and social capital and therefore their market value are increased by the
technical and problem-solving training built into these systems.

(2) Workers prefer these work systems over either traditional union or non-union systems.
3. Korea:
According to Research article “HPWP Organizational Creativity and Coordination”,
Korea.
Key mechanisms through which HPWP help organizations in Korea to achieve performance
goals are relational coordination among employees and innovativeness.
Relational coordination among employees:
Relational coordination among employees and across diverse units as another important
mechanism underlying the link between HPWP and organizational outcomes. Relational
coordination refers to “a mutually reinforcing process of interaction and communication, and
relationships carried out for the purpose of task integration” Key components of relational
coordination include work relationships characterized by shared goals and knowledge and
High Performance Work Practice 14

mutual respect together with frequent, timely and accurate communication that is focused on
problem-solving rather than blaming.
Organizational Innovativeness:
Organizational innovativeness is a key outcome of HPWP. Organizational
innovativeness refers to “Introduction of something new to an organization” which “implies a
firm being proactive by exploring new opportunities rather than merely exploiting current
strengths” HPWP enhance organizational innovativeness through relational coordination and
collaboration among employees and across diverse units for a number of reasons. One of the
key features of HPWP is internal knowledge and information dissemination through practices
such as job rotation, decentralized decision-making and shared information systems.
4. China:
According to research article of Y Zhang Diffusing high performance work practices,
China
In Chinese organizations, independent and interconnected work practices are designed
to enhance employees’ skills, motivation, and opportunities and ultimately improve
organizational performance. Other than these important characteristics, role of authentic
leadership is important.
Importance of Authentic leadership role in Chinese organizations:
Line managers in organizations can affect employees’ perceptions of HPWP through
their leadership behaviors which demonstrates the capabilities and willingness of line managers
to implement work practices. Authentic leadership not only inherently possesses multiple
positive capabilities, such as sharing information openly and maintaining their integrity, but
also effectively handles various demands of organizational stakeholders in the complex
enactment environment which may facilitate the alignment of HPWP in the implementation
process.
Specifically, authentic leadership includes multiple inherent positive capabilities such
as leaders expressing their true self to others and behaving with their internalized moral
perspective.
Due to this prominent implementation of HPWP, it is instructive to enhance the sense
of credibility, integrity, and authenticity of work practices within organizations of these
developed countries which in turn affects the degree of employees’ acceptance and, ultimately,
the effectiveness of HPWP.
High Performance Work Practice 15

High Performance Work System – Benefits to Employees and Organization

HPWSs bring in benefits to the organization in terms of performance, productivity and
profitability and to the employees through better quality of work life and job security.
Benefits to Employees:
There are many potential benefits to employees from HPWSs-
i. Employees have the advantage to decide how to achieve their goals.
ii. They can take risks, generate new ideas and make mistakes which in turn lead to new
products, services and markets.
iii. Because of their involvement and commitment, the employees are likely to be more
satisfied and find that their needs for growth are fully met.
iv. Due to sharing of information and empowerment, they feel that they have important
role to play in the organization.
v. They feel proud that their opinions and expertise are valued more.
vi. Consequent to gaining higher skills and greater potential for contribution the employees
will have more job security and also be more marketable to other organizations.
vii. Employees with higher qualifications can achieve their potential by utilizing their skills
and abilities.
viii. They can contribute to organizational success while fulfilling their personal job growth
and work satisfaction needs.
ix. HPWS serves to unite organizational objectives and employee contributions.
Benefits to Organization:
Organizations get many benefits from HPWS which include higher productivity, lower costs,
and better responsiveness to customers, greater flexibility and higher profitability.
i. HPWS increases value by establishing means to increase efficiency, decrease costs,
improve processes and provide unique services to customers.
ii. It helps organizations develop and utilize skills, knowledge and abilities that are not
equally available to all organizations.
iii. HPWSs are designed around team processes and capabilities which cannot be
duplicated or copied by rival firms.
iv. The systems combine the talents of employees and deploy them quickly in various new
assignments with maximum flexibility.
High Performance Work Practice 16

Shortcomings of HPWS:
Although HPWP practices are generally considered to have a positive impact on employees’
wellbeing, there also exist certain opposing views. It is discussed that conventional work
systems provide a more beneficial work environment and also result in better organizational
performance.

One of the disadvantages of HPWP is that employees are slowly becoming disorientated due
to decentralized decision-making; they don’t know what is expected from them as
responsibility is passed on from one team member to another.

Effective Implementation of HPWP:

For effective implementation there must be adequate resources in terms of finance, time and
expertise. Though the responsibility of implementation lies with the line managers, HR
managers can be invaluable partners in making the required changes. There are special HR
units and transition teams of senior line as well as HR managers to implement HPWS.

Organizational systems are holistic entities - HPWPs must be implemented in a holistic

manner

HPWPs, when implemented correctly, improve productivity and quality, but the key is to view
systems not component by component, but in a holistic manner - how they can be implemented
in an all-embracing way. This approach involves implementation around the firm as a whole,
including technology, employees, and their workplaces.

Conclusion:
After going through multiple examples and theories for organizations who implement HPWP,
it is very obvious that companies with High Performance Working are found more productive,
highly successful in customer satisfaction, improved product and service qualities and so forth
than those companies that didn’t use High Performance working. Organizations that seek
further development in its core competencies and total output must turn their attention towards
this growing trend of High-Performance Working system.
High Performance Work Practice 17

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